AB 157: Small group market: single risk pool: index rate.

Existing federal law, the federal Patient Protection and Affordable Care Act, creates various premium stabilization programs, such as the transitional reinsurance program and the risk adjustment program, to stabilize premiums in the individual market inside and outside of the Exchanges. Under the transitional reinsurance program, contributions are collected from contributing entities to fund reinsurance payments to issuers of nongrandfathered reinsurance-eligible individual and small group market plans and the administrative costs of operating the reinsurance program for the 2014, 2015, and 2016 benefit years.

Existing law establishes the California Health Benefit Exchange within state government for the purpose of facilitating the purchase of qualified health plans through the Exchange by qualified individuals and small employers.

Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires a health insurer, on and after October 1, 2013, to fairly and affirmatively offer, market, and sell all of the insurers small employer health insurance policies for plan years on or after January 1, 2014, to all small employers in each service area in which the plan provides or arranges for the provision of health care services. Existing law requires an insurer to consider the claims experience of all insureds in all nongrandfathered small employer health benefit plans offered by that insurer in this state as a single risk pool for rating purposes in the small employer market. Existing law requires an insurer to establish, at least each calendar year, and no more frequently than each calendar quarter, an index rate for the small employer market based on the total combined claims costs for providing essential health benefits, as defined, within the single risk pool and requires the index rate to be adjusted on a marketwide basis based on the total expected marketwide payments and charges under the risk adjustment and reinsurance programs established for the state under the federal provisions described above and the Exchange user fees. Existing law requires the premium rate for all of the nongrandfathered small employer health benefit plans within the single risk pool to use the applicable marketwide adjusted index rate, as specified.

This bill would delete the reference to the federal transitional reinsurance program in these provisions.